Social Platforms Struggle With Economy

Snapchat and Twitter struggle as economy affects advertiser demand.

Twitter and Snapchat have both reported their revenue income for the second quarter during internal and external challenges this year and found that both platforms came in below expectations.

Snapchat’s owner’s revenue had risen  13% year on year (YoY) to about $1.11 billion in Q2. In May this year, the company’s analysts had disclosed information that they were expecting a miss in targets for this period.

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Twitter saw a revenue decline of one percent YoY to $1.18 billion due to challenges such as industry headwinds and the back and forth struggle with Elon Musk.

Due to both firms’ acquisitions disclosed previously, Wall Street didn’t have high hopes for the social media companies’ revenues this quarterly. And yet the latest results were still disappointing. Amazon and Meta Platforms including Instagram and Facebook will provide earnings reports next week.

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Twitter has become a very hot topic over the last couple of months due to its ugly relationship currently with Elon Musk. The SpaceX and Tesla founder declared earlier this year his intentions to buy Twitter for $44 billion. However, in July he has been trying to back out of the deal due to Twitter’s take on how the platform tracks down its bots and spam accounts.

The social media company has sued Musk, forcing him to complete an  acquisition for an agreed-upon price and a trial is set for October this year.

Additionally, there have been other challenges facing these platforms such as the war in Ukraine and its cast on businesses with rising inflation and fears of recession affecting advertiser demand.

Snapchat finance chief Derek Anderson says that there is more competition since marketers spend less in fewer places.

“Competition, whether it’s with TikTok or any of the other very large, sophisticated players in this space, has only intensified.” – Derek Anderson.

Though, even before the economy had impacted media spending, mobile advertisements have been fighting with policy changes implemented by Apple last year, making tracking users more difficult.

To try to overcome this problem, Snapchat has invested more heavily in three areas to make revenue growth:

  1. Products and platforms,
  2. Direct-response advertising,
  3. Search for new revenue sources.

Twitter’s actions are yet unknown as the company awaits the decision from the musk case later this year.

Finally, for our previous #SocialShort, click here.